British Columbia Institute of Technology CAR (March 2020)...British Columbia Institute of Technology...

British Columbia Institute of Technology

Consolidated Financial Statements March 31, 2020 (in thousands of dollars)

PricewaterhouseCoopers LLP PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7 T: +1 604 806 7000, F: +1 604 806 7806

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Independent auditor’s report

To the Board of Governors of British Columbia Institute of Technology and the Minister of Advanced Education of the Province of British Columbia

Our opinion

In our opinion, the accompanying consolidated financial statements of British Columbia Institute of Technology and its subsidiaries (together the Institute) as at March 31, 2020 and for the year then ended are prepared, in all material respects, in accordance with the accounting requirements of Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia.

What we have audited The Institute’s consolidated financial statements comprise:

the consolidated statement of financial position as at March 31, 2020;

the consolidated statement of operations and accumulated surplus for the year then ended;

the consolidated statement of remeasurement (losses) gains for the year then ended;

the consolidated statement of changes in net debt for the year then ended;

the consolidated statement of cash flows for the year then ended;

and the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Institute in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Comparative information

The consolidated financial statements of the Institute for the year ended March 31, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on May 28, 2019.

Emphasis of matter - basis of accounting

We draw attention to note 2 to the consolidated financial statements, which describes the basis of accounting and the significant differences between such basis of accounting and Canadian public sector accounting standards. Note 2 to the consolidated financial statements provides a description of the nature of these differences. Our opinion is not modified in respect of this matter.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements in accordance with the accounting requirements of Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Institute’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Institute or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Institute’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Institute’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Institute’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Institute to cease to continue as a going concern.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Institute to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Chartered Professional Accountants

Vancouver, British Columbia May 29, 2020

British Columbia Institute of Technology Consolidated Statement of Financial Position As at March 31, 2020

(in thousands of dollars)

Approved by the Board of Directors

___________________________________ Director ________________________________ Director

Doug Eveneshen, Board Chair Cathy Young, Audit & Finance Committee Chair

The accompanying notes are an integral part of these consolidated financial statements.

2020$

2019$

AssetsCash and cash equivalents 107,204 93,070Accounts receivable (note 3) 7,534 5,822Inventories for resale 1,472 1,425Due from government and other government organizations (note 4) 13,277 14,177Portfolio investments (note 5) 6,510 9,120Debt sinking funds (note 6) 7,167 6,130Investments in government business enterprises and partnerships (note 7) 13,647 12,957

156,811 142,701

LiabilitiesAccounts payable and accrued liabilities (note 8) 34,412 30,169Due to government and other government organizations (note 4) 6,414 5,385Employee future benefits (note 9) 27,613 26,916Deferred tuition fees 39,470 38,909Deferred revenue – other 6,109 6,516Deferred contributions (note 10) 30,172 29,646Deferred capital contributions (note 11) 278,905 251,428Asset retirement obligation (note 12) 21,007 18,778Debt (note 13) 56,398 56,570Obligations under capital lease (note 14) 20,479 21,087

520,979 485,404

Net debt (364,168) (342,703)

Non-financial assetsTangible capital assets (note 15) 471,392 445,096Endowment investments (notes 5 and 16) 27,966 27,378Inventories held for use 270 309Prepaid expenses 881 746

500,509 473,529

Accumulated surplus 136,341 130,826

Accumulated surplus comprises:Accumulated operating surplus 138,122 129,205Accumulated remeasurement (losses) gains (1,781) 1,621

136,341 130,826

Commitment and contingencies (note 17)

COVID-19 (note 22)

British Columbia Institute of Technology Consolidated Statement of Operations and Accumulated Surplus For the year ended March 31, 2020



Budget$

2020$

2019$

RevenueProvince of British Columbia grants 144,770 146,638 139,740Government of Canada grants - 173 155Tuition fees 128,007 148,303 131,463Sales and ancillary revenue 12,688 13,090 12,762Industry services 12,083 12,685 11,842Facilities rental, cost recoveries and other income 7,731 7,684 6,953Investment income 2,050 4,633 4,291Gifts and donations 1,200 2,552 2,060(Loss) income from government business

enterprises and partnerships (note 7) - (557) 3,576Amortization of deferred contributions (note 10) 12,132 17,335 15,562Amortization of deferred capital contributions

(note 11) 12,321 13,222 12,713

332,982 365,758 341,117

Expenses (note 20)Academic and student support 49,463 50,896 47,343Administrative support 59,653 61,551 57,726Ancillary 11,340 11,710 12,145Instruction 204,238 219,246 202,967Externally funded and related entities 8,288 15,358 12,968

332,982 358,761 333,149

Operating surplus before endowment contributions - 6,997 7,968

Endowment contributions - 588 2,710

Operating surplus for the year - 7,585 10,678

Accumulated operating surplus –Beginning of year 129,205 118,681

Recognition adjustment – Government business enterprises (note 7) 1,332 -

Transitional adjustment to IFRS 9 - (154)

Accumulated operating surplus –End of year 138,122 129,205

British Columbia Institute of Technology Consolidated Statement of Remeasurement (Losses) Gains For the year ended March 31, 2020



2020$

2019$

Government business enterprises and partnershipsTransitional adjustment to IFRS 9 (note 7) - 154

Unrealized losses (3,094) (161)

Realized losses on investment, reclassified to consolidated statement of operations and accumulated surplus (308) (417)

Net remeasurement losses (3,402) (424)

Accumulated remeasurement gains – Beginning of year 1,621 2,045

Accumulated remeasurement (losses) gains – End of year (1,781) 1,621

British Columbia Institute of Technology Consolidated Statement of Changes in Net Debt For the year ended March 31, 2020



Budget$

2020$

2019$

Operating surplus for the year - 7,585 10,678

Additions of tangible capital assets (51,350) (52,007) (55,336)Amortization of tangible capital assets 27,567 25,834 27,224(Gain) loss on disposition of tangible capital assets 250 (123) 1,066

(23,533) (26,296) (27,046)

Additions of endowment investments - (588) (2,710)Change in inventories held for use - 39 (67)Change in prepaid expenses - (135) 93

- (684) (2,684)

Recognition adjustment – Government business enterprises (note 7) - 1,332 -

Net remeasurement losses - (3,402) (578)

Increase in net debt (23,533) (21,465) (19,630)

Net debt – Beginning of year (342,703) (323,073)

Net debt – End of year (364,168) (342,703)

British Columbia Institute of Technology Consolidated Statement of Cash Flows For the year ended March 31, 2020



2020$

2019$

Cash provided by (used in)

Operating activitiesOperating surplus for the year 7,585 10,678Items not involving cash

Loss (income) from government business enterprises and partnerships 557 (3,576)

Amortization of tangible capital assets 25,834 27,224Employee future benefits 699 1,097Asset retirement obligation accretion expense 511 520(Gain) loss on disposition of tangible capital assets (123) 1,066Amortization of deferred capital contributions (note 11) (13,222) (12,713)

21,841 24,296

Change in non-cash working capital items (note 18) 4,997 13,343

26,838 37,639

CapitalPurchases of tangible capital assets (47,186) (49,294)Asset retirement obligation liabilities settled (379) (273)

(47,565) (49,567)

Investing activitiesChanges in investments, net (1,380) (3,595)Contribution from government business enterprises and partnerships 85 32

(1,295) (3,563)

Financing activitiesCapital contributions received 40,699 37,631Repayment of debt sinking funds (1,037) (1,019)Capital lease payments (3,334) (3,420)Debt repayments (172) (252)

36,156 32,940

Increase in cash and cash equivalents 14,134 17,449

Cash and cash equivalents – Beginning of year 93,070 75,621

Cash and cash equivalents – End of year 107,204 93,070

Supplemental cash flow information (note 18)

British Columbia Institute of Technology Notes to Consolidated Financial Statements March 31, 2020


(1)

1 General

British Columbia Institute of Technology (the Institute) is an agent of the Crown and operates under the College

and Institute Act, R.S.B.C. 1996 (the Act). The Act is administered by the Minister of Advanced Education. As

an agent of the government, the Institute is not liable for taxation except to the extent the government is liable.

The purpose of the Institute is to provide courses of instruction in advanced technological and vocational fields.

The Institute receives a significant portion of its revenue and capital funding from the Province of British

Columbia (the Province).

The Institute is a registered charity under the Income Tax Act (Canada).

2 Summary of significant accounting policies

Basis of presentation

These consolidated financial statements have been prepared in accordance with Section 23.1 of the Budget

Transparency and Accountability Act of the Province of British Columbia, which requires accounting policies to

be consistent with Canadian public sector accounting standards except in regard to the accounting for restricted

capital contributions.

Under Section 23.1 of the Budget Transparency and Accountability Act and its related regulations, the Institute

is required to recognize restricted capital contributions as a liability and recognize them into revenue on the

same basis as the related amortization expense.

Under Canadian public sector accounting standards, those transfers with stipulations that have been met or

that do not contain stipulations that create a liability, are fully recognized into revenue.

The impact of this difference on the consolidated financial statements of the Institute would be a decrease in

deferred capital contributions, an increase in accumulated surplus and a change in revenues and annual surplus

for each year.

Basis of consolidation

a) Consolidated entities

The consolidated financial statements reflect the assets, liabilities, revenue and expenses of organizations

which are controlled by the Institute. Controlled organizations are consolidated except for government

business enterprises and partnerships, which are accounted for by the modified equity method. All

balances and transactions between the Institute and the consolidated entities have been eliminated on

consolidation.



(2)

The following organization is controlled by the Institute and fully consolidated in these financial

statements:

BCIT Foundation, which is a controlled not-for-profit organization, is incorporated under the

Societies Act (British Columbia). The purpose of BCIT Foundation is to raise funds in order to further

the goals, objectives and strategic interests of the Institute; to stimulate and provide financial support

for the development and expansion of educational programs, services, capital projects and other

initiatives as recommended by the Institute; and to provide financial support to enable students to

participate in learning at the Institute.

b) Investment in government business enterprises and partnerships

Government business enterprises and partnerships are accounted for by the modified equity method.

Under this method, the Institute’s investment in the business enterprise and its net income and other

changes in equity are recorded. No adjustment is made to conform the accounting policies of the

government business enterprise/partnership to those of the Institute.

The following organizations are controlled government business enterprises and partnerships and are

accounted for using the modified equity method:

Great Northern Way Campus Trust (the Trust) – the Trust is an equal share joint venture between the

Institute, Simon Fraser University of British Columbia, and Emily Carr University of Art + Design.

The purpose of the Trust is to develop an integrated, learning-centred campus with a high-technology

focus, supported by new media and telecommunication technologies. The Trust’s activities currently

comprise two distinct business activities: property management and site development activities, and

educational activities.

TTA Technology Training Associates Ltd. (TTA) – TTA is a wholly owned corporation which was

incorporated July 12, 1999 under the Business Corporations Act (British Columbia). The purpose of

TTA is to provide international delivery and/or management of technical training and educational

programs to public and private organizations, business development and marketing for the Institute

in overseas markets.

PanGlobal Training Systems Ltd. (PanGlobal) – PlanGlobal is an equal share joint venture between

the Institute, Southern Alberta Institute of Technology and Northern Alberta Institute of Technology.

The purpose of PanGlobal is to produce and market Power Engineering multimedia learning

products.

Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid securities which will mature within 90 days or less.



(3)

Inventories for resale and held for use

Inventories of merchandise held for resale are recorded at the lower of cost and net realizable value. Inventories

held for use are recorded at the lower of cost and replacement cost. Cost is determined using the first-in, first-

out method for all inventories.

Tangible capital assets

Tangible capital asset acquisitions are recorded at cost, which includes amounts that are directly attributable to

acquisition, construction, development or betterment of the asset. Donated assets are recorded at fair market

value at the date of acquisition.

Tangible capital assets are amortized on a straight-line basis over their estimated useful lives as follows:

Buildings 40 yearsLeasehold improvements 30 yearsCapital projects/renovations 10 to 25 yearsComputer hardware 4 yearsComputer software 5 yearsFurniture and equipment 10 yearsLibrary holdings 10 years

Computers and equipment under capital lease are amortized on a straight-line basis over the lesser of their

estimated useful lives and the term of the lease.

Assets under construction are not amortized until the asset is available for productive use.

Tangible capital assets are written down when conditions indicate they no longer contribute to the Institute’s

ability to provide goods and services, or when the value of future economic benefits associated with the tangible

capital assets are less than their net book value.

Employee future benefits

The Institute and its employees make contributions to the College Pension Plan and the Municipal Pension

Plan, which are multi-employer joint trusteed plans. These plans are defined benefit plans, providing pension

on retirement based on the member’s age at retirement, length of service and highest earnings averaged over

five years. As the assets and liabilities of the plans are not segregated by institution, the plans are accounted for

as defined contribution plans and any Institute contributions to the plans are expensed as incurred.

The Institute also provides certain benefits, including accumulated sick and vacation pay, retirement allowance,

group benefits and life insurance, for certain employees pursuant to certain contracts and union agreements.

The costs of these benefits are actuarially determined based on service and management’s best estimate of

salary escalation, retirement ages of employees, and expected plan benefits costs. The obligation under these

benefit plans is accrued based on projected benefits as the employees render services necessary to earn the

future benefits. Actuarial gains and losses are amortized over the expected average remaining service lives of

the employees.



(4)

Asset retirement obligation

The Institute recognizes the fair value of a future asset retirement obligation as a liability in the period in which

it incurs a statutory, contractual or legal obligation associated with the retirement of tangible long-lived assets

that results from the acquisition, construction, development, and/or normal use of the assets. The Institute

concurrently recognizes a corresponding increase in the carrying amount of the related long-lived asset that is

depreciated over the useful life of the asset. The fair value of the asset retirement obligation is estimated using

the expected cash flow approach. Subsequent to the initial measurement, the asset retirement obligation is

adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows

underlying the obligation or the discount rate. Changes in the obligation due to the passage of time are

recognized in the consolidated statement of operations and accumulated surplus as accretion expense. Changes

in the obligation due to changes in estimated cash flows or discount rates are recognized as an adjustment of

the carrying amount of the related long-lived asset that is depreciated over the remaining life the of asset.

Liability for contaminated sites

Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a

chemical, organic or radioactive material or live organism that exceeds an environmental standard. The liability

is recorded net of any expected recoveries. A liability for remediation of contaminated sites is recognized when

a site is not in productive use and all the following criteria are met:

an environmental standard exists;

contamination exceeds the environmental standard;

the Institute

is directly responsible; or

accepts responsibility;

it is expected that future economic benefits will be given up; and

a reasonable estimate of the amount can be made.

The liability is recognized as management’s estimate of the cost of post-remediation including operation,

maintenance and monitoring, that is an integral part of the remediation strategy for a contaminated site.

Revenue recognition

Tuition fees and receipts from sales of services and products are recognized as revenue at the time the products

are delivered or the services are substantially provided.

Rental revenue is recognized over the period earned.

Revenue related to fees or services received in advance of the fee being earned or the service performed is

deferred and recognized when the fee is earned or service performed.

Investment income includes interest recorded on an accrual basis and dividends recorded as declared, realized

gains and losses on the sale of investments and writedowns on investments where the loss in value is

determined to be other than temporary.



(5)

Unrestricted donations and grants are recorded as revenue when receivable if the amounts can be estimated

and collection is reasonably assured. Pledges from donors are recorded as revenue when payment is received by

the Institute or the transfer of property is completed.

Restricted donations and grants are reported as revenue depending on the nature of the restrictions on the use

of the funds by the contributors as follows:

a) Contributions for the purpose of acquiring or developing a depreciable tangible capital asset or in the form

of a depreciable tangible capital asset, in each case for use in providing services, are recorded and referred

to as deferred capital contributions and recognized in revenue at the same rate that amortization of the

tangible capital asset is recorded. The reduction of the deferred capital contributions and the recognition of

the revenue are accounted for in the fiscal period during which the tangible capital asset is used to provide

services.

b) Contributions restricted for specific purposes other than for those to be held in perpetuity or the

acquisition or development of a depreciable tangible capital asset are recorded as deferred contributions

and recognized in revenue in the year in which the stipulation or restriction on the contribution has been

met.

c) Contributions to be retained in perpetuity are classified as endowment donations and are recorded as

revenue when received. Investment income earned on endowment principal is recorded as deferred

revenue if it meets the definition of a liability and is recognized as revenue in the year related expenses are

incurred. If the investment income earned does not meet the definition of a liability, it is recognized as

revenue in the year it is earned.

Financial instruments

Financial instruments consist of cash and cash equivalents, accounts receivable, portfolio investments, debt

sinking funds, accounts payable and accrued liabilities, debt and endowment investments.

Investments are measured at fair value. All other financial instruments are measured at cost or amortized cost.

Transaction costs are expensed for financial instruments measured at fair value. Transaction costs are added to

the cost of the financial instruments for financial instruments measured at cost or amortized cost.



(6)

Unrealized gains and losses from changes in the fair value of financial instruments are recognized in the

consolidated statement of remeasurement (losses) gains until such time that the financial instrument is

derecognized due to disposal or impairment. At the time of derecognition, the related realized gains and losses

are recognized in the consolidated statement of operations and accumulated surplus and related balances

reversed from the consolidated statement of remeasurement (losses) gains.

For financial instruments measured using amortized cost, the effective interest rate method is used to

determine interest revenue or expense.

Interest and dividends attributable to financial instruments are reported in the consolidated statement of

operations and accumulated surplus.

All financial assets are tested annually for impairment. When financial assets are impaired, impairment losses

are recorded in the consolidated statement of operations and accumulated surplus.

Functional classification of expenses

The Institute has identified the following segments and associated groups of activities based upon the

functional areas of service as provided by various departments within the Institute:

Academic and student support

Academic and student support includes expenses related to the direct support of academic functions, as

well as centralized functions that support students and groups of students. This includes Foundation &

Alumni, VP ERI, Student Services, Research & Planning, International Education, Learner Services,

Learning & Teaching Centre, Library, Marketing & Communication, Print Services, Registrar’s Office and

Technology Centre administration. Costs associated with this function include VPs, management,

administration, support staff and related support costs.

Administrative support

Administrative support includes expenses related to activities that support the Institute as a whole. This

includes Financial Services, Human Resources, Internal Auditing, President’s Office, Board of Governors,

Purchasing & Supply Management, Safety and Security, Facilities, Amortization and IT &

Communications. Costs associated with the function include VPs management, administration, support

staff and related support costs.

Ancillary

Ancillary includes expenses related to business activities outside of instruction and research that provide

goods and services to students, staff and others external to the organization. This includes Bookstore,

Room Rentals, Leases, Food Services, Parking and Residences. Costs associated with this function include

management, administration, support staff and related support costs.



(7)

Instruction

Instruction includes expenses related to the direct business of delivering education. This would include

full-time studies part-time studies and training supported by industry services. Costs associated with this

function include instructors, contract expenses, deans, instructional administration, support staff and

related support costs.

Externally funded and related entities

Externally funded and related entities include expenses related to research and non-research activities

funded by external contracts and/or grants, trust activities and subsidiaries. This would include Restricted

Funds, Applied Research Grants, Student Wards and BCIT Foundation. Costs associated with this function

include deans, management, administration, support staff and related support costs.

Budget figures

Budget figures have been provided for comparative purposes and have been derived from the 2019/2020 Fiscal

Plan approved by the Board of Governors of the Institute on March 19, 2019.

Use of estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the consolidated financial statements and the reported amounts of revenue and expenses during the

reporting period. Significant areas requiring the use of management estimates relate to the determination of the

useful lives for amortization of tangible capital assets and deferred capital contributions, the valuation of

employee future benefit obligations, future cash flows associated with asset retirement obligations, the

provision for uncollectible accounts and the provision for contingencies. Actual amounts may ultimately differ

from these estimates.

3 Accounts receivable

2020$

2019$

Student 3,364 3,099Trade and other 2,990 3,098Allowance for doubtful accounts (375) (375)Funds owed by external agencies 1,555 -

7,534 5,822



(8)

4 Balances with government and other government organizations

Due from government and other government organizations

2020$

2019$

Federal government 2,530 766Provincial government 9,754 12,332Other government organizations 993 1,079

13,277 14,177

Due to government and other government organizations

2020$

2019$

Federal government 1,430 1,111Provincial government 3,998 3,291Other government organizations 986 983

6,414 5,385

5 Investments

Investments consist of:

2020$

2019$

Portfolio investments 6,510 9,120Endowment investments 27,966 27,378

34,476 36,498

The underlying investments consist of:

Fair value hierarchy

level 2020 $

2019 $

Equities Level 2 18,027 15,882Cash and cash equivalents Level 1 1,521 2,917Fixed income Level 2 14,928 17,699

34,476 36,498

Historical cost 36,616 35,082



(9)

6 Debt sinking funds

Contributions to the sinking funds are made for certain long-term debt obligations with the Province.

Investments held in the sinking funds, including interest earned, are used to repay the related debt at maturity.

The Institute makes annual payments of principal and interest towards the sinking funds, which are held and

invested by the Province to provide for the retirement of the debt.

Aggregate payments for the next five fiscal years and thereafter to meet sinking fund instalments on externally

restricted sinking funds and retirement provisions on notes, bonds and debentures are:

$

2021 7882022 7882023 7882024 7882025 788Thereafter 12,028

15,968

7 Investments in government business enterprises and partnerships

Balance –Beginning

of year $

Net contributions

received $

Recognition adjustment

$

Net (loss) income

$

Balance – End of year

$

Investment in Trust 12,607 (85) - (623) 11,899Investment in

PanGlobal - - 1,332 64 1,396Investment in TTA 352 - - - 352

12,959 (85) 1,332 (559) 13,647

The recognition adjustment relates to an uplift to recognize the investment in PanGlobal. The Institute

identified that there was joint control over PanGlobal during the financial year and, therefore, has recognized

the investment as the proportion of PanGlobal’s net assets attributable to the Institute.



(10)

Condensed financial information of the Trust that is part of the Institute’s reporting entity is as follows:

Great Northern Way Campus Trust

25% share

2020$

2019$

Statement of financial positionTotal assets 14,563 15,452Total liabilities 2,664 2,845

Equity 11,899 12,607

Statement of operationsRevenue 1,721 6,504Expenses (1,564) (2,910)Unrealized loss on investment (780) (20)

Net (loss) earnings (623) 3,574

Total liabilities include $280 (2019 – $195) payable to the Institute.

8 Accounts payable and accrued liabilities

2020$

2019$

Trade payables 16,645 8,688Salaries and benefits payable 11,879 10,413Held for external agencies - 6,363Other 5,888 4,705

34,412 30,169

9 Pension plans and employee future benefits

Pension plans

The Institute and its employees contribute to the College Pension Plan and the Municipal Pension Plan, which

are jointly trusteed pension plans. The boards of trustees for these plans, representing plan members and

employers, are responsible for administering the pension plans, including investing assets and administering

benefits. The plans are multi-employer defined benefit pension plans. Basic pension benefits provided are

based on a formula. As at August 31, 2019, the College Pension Plan had about 15,000 active members, and

approximately 8,000 retired members. As at December 31, 2018, the Municipal Pension Plan had about

205,000 active members, including approximately 6,000 from colleges.

Every three years, an actuarial valuation is performed to assess the financial position of the plans and adequacy

of plan funding. The actuary determines an appropriate combined employer and member contribution rate to



(11)

fund the plans. The actuary’s calculated contribution rate is based on the entry-age normal cost method, which

produces the long-term rate of member and employer contributions sufficient to provide benefits for average

future entrants to the plans. This rate may be adjusted for the amortization of any actuarial funding surplus and

will be adjusted for the amortization of any unfunded actuarial liability.

The most recent actuarial valuation from the College Pension Plan as at August 31, 2018, indicated a $303

million surplus for basic pension benefits on a going concern basis. The next valuation for the College Pension

Plan will be as at August 31, 2021, with results available in 2022. The most recent actuarial valuation for the

Municipal Pension Plan as at December 31, 2018, indicated a $2,866 million funding surplus for basic pension

benefits on a going concern basis. The next valuation for the Municipal Pension Plan will be as at December 31,

2021, with results available in 2022.

Employers participating in the plans record their pension expense as the amount of employer contributions

made during the fiscal year (defined contribution pension plan accounting). This is because the plans record

accrued liabilities and accrued assets for the plans in aggregate, resulting in no consistent and reliable basis for

allocating the obligation, assets and cost to individual employers participating in the plans.

The Institute paid $17,775 for employer contributions to the plan in fiscal 2020 (2019 –$16,253), consisting of

$13,738 to the College Pension Plan and $4,037 to the Municipal Pension Plan.

Employee future benefits

The Institute also provides certain benefits, including accumulated sick and vacation pay, retirement allowance,

group benefits and life insurance, for certain employees pursuant to certain contracts and union agreements.

The most recent actuarial valuation was completed as at March 31, 2019.



(12)

Information about these employee future benefits is as follows:

2020$

2019$

Accrued benefit obligation 23,297 21,821Fair value of plan assets - -

Funded status (23,297) (21,821)Unamortized net actuarial gains (2,407) (3,361)

Accrued benefit liability (25,704) (25,182)Employer’s share of benefits (EI, CPP, pension) (1,909) (1,734)

Total liability (27,613) (26,916)

Components of net benefit expense

2020$

2019$

Service cost 1,409 1,346Interest cost 480 637Long-term disability experience (411) (1)Amortization of net actuarial gain (396) (41)

Net benefit expense 1,082 1,941

The significant assumptions used are as follows:

2020%

2019%

Accrued benefit obligations as of March 31Discount rate 2.0 2.4

Benefit cost for year ended March 31Discount rate 2.4 2.8

Assumed health care cost trend rates at March 31 4.0 – 6.1 4.0 – 6.2

10 Deferred contributions

Deferred contributions related to expenses of future periods represent unspent externally restricted grants and

donations. Deferred contributions are primarily restricted for research purposes.

2020$

2019$

Balance – Beginning of year 29,646 26,988Add: Contributions received during the year 28,898 26,307Less: Amounts recognized as amortization of deferred contributions

revenue (17,335) (15,562)Less: Amounts recognized as Province of British Columbia grants

revenue (9,037) (8,087)Less: Amounts transferred to deferred capital contributions (2,000) -

Balance – End of year 30,172 29,646



(13)

11 Deferred capital contributions

Capital contributions for the purpose of acquiring or developing a depreciable tangible capital asset are referred

to as deferred capital contributions. Amounts are recognized into revenue at the same rate that amortization of

the tangible capital asset is recorded. Treasury Board provided direction on accounting treatment as disclosed

in note 2.

Changes in the deferred capital contributions balance are as follows:

2020$

2019$

Balance – Beginning of year 251,428 226,510Add: Contributions received during the year 40,699 37,631Less: Amounts amortized to revenue (13,222) (12,713)


The balance of unamortized capital contributions related to capital assets consists of the following:

2020$

2019$

Unamortized capital contributions used to purchase assets 273,668 250,512Unspent capital funding 5,237 916

278,905 251,428

12 Asset retirement obligation

The Institute has recorded an asset retirement obligation for the estimated costs of asbestos removal from

certain facilities. The following is a reconciliation of the changes in the asset retirement obligation during the

year:

2020$

2019$

Balance – Beginning of year 18,778 17,309Add: Accretion expense 511 520Add: Adjustment for change in discount rate 2,097 1,222Less: Liabilities settled (379) (273)


The accretion expense is included in interest expense. The undiscounted estimated cash flows required to settle

the obligation are approximately $21,515 to be paid during the fiscal years 2020 to 2070. The estimated cash

flows were discounted using the credit-adjusted risk-free rate of 2.58% (2019 – 2.70%).



(14)

13 Debt

2020$

2019$

Province of British Columbia, 8% bond, due September 2023 (i) 12,888 12,888Province of British Columbia, 4.3% bond, due June 2042 (i) 32,189 32,189Province of British Columbia, 1.95% promissory note, due

August 2019 - 5,055Province of British Columbia, 3.25% bond, due December 2021 (i) 5,000 -

50,077 50,132Province of British Columbia, 4.3% bond, premium payable (ii) 6,165 6,438Province of British Columbia, 3.25%, premium payable (ii) 156 -

56,398 56,570

(i) Interest payments are made to the Province of British Columbia semi-annually. The Institute makes

contributions to the sinking fund each year to repay the bonds at maturity (note 6). The bonds are

unsecured.

(ii) The bond premium is being amortized based upon the effective interest method.

Principal payments for the next five years and thereafter are as follows:

Province of British

Columbia, 3.25% bond

$

Province of British

Columbia, 4.3% bond

$

Province of British

Columbia, 8% bond

$Total

$

2021 - - - -2022 5,000 - - 5,0002023 - - - -2024 - - 12,888 12,8882025 - - - -Thereafter - 32,189 - 32,189

5,000 32,189 12,888 50,077

Interest expense on debt is $2,741 (2019 – $2,187).



(15)

14 Obligations under leases

Capital leases

Capital lease payments, including principal and interest, are as follows:

$

2021 3,3912022 2,9162023 1,7662024 1,2142025 877Thereafter 20,137

30,301Less: Interest at rates from 2.0% to 5.5% 9,822

Present value of minimum lease payments 20,479

Interest expense on capital leases is $913 (2019 – $933).

Operating leases

The Institute has entered into operating leases for land.

Operating lease payments for the next five years and thereafter are as follows:

$

2021 2552022 2552023 2552024 2552025 255Thereafter 6,343

7,618



(16)

15 Tangible capital assets

2019$

Additions$

Disposals$

2020$

CostLand 44,808 - - 44,808Buildings, leasehold improvements

and capital projects/ renovations 501,543 26,650 - 528,193

Buildings under capital lease 15,295 - - 15,295Furniture and equipment 138,440 6,191 (4,008) 140,623Computer hardware and software 37,147 2,859 (8,158) 31,848Equipment under capital lease 14,392 2,735 (3,475) 13,652Library holdings 3,120 176 - 3,296Construction-in-process 43,202 13,397 - 56,599

797,947 52,008 (15,641) 834,314

2019 $

Amortization $

Accumulated amortization on disposals

$2020

$

Accumulated amortizationLand - - - -Buildings, leasehold improvements

and capital projects/ renovations 205,352 14,486 - 219,838

Buildings under capital lease 2,368 505 - 2,873Furniture and equipment 107,126 4,242 (3,969) 107,399Computer hardware and software 27,331 3,598 (8,208) 22,721Equipment under capital lease 8,853 2,743 (3,591) 8,005Library holdings 1,824 262 - 2,086

352,854 25,836 (15,768) 362,922

2020$

2019$

Net book valueLand 44,808 44,808Buildings, leasehold improvements and capital projects/renovations 308,355 296,191Buildings under capital lease 12,422 12,927Furniture and equipment 33,224 31,317Computer hardware and software 9,127 9,816Equipment under capital lease 5,647 5,539Library holdings 1,210 1,296Construction-in-process 56,599 43,202

471,392 445,096



(17)

16 Endowments

Endowment contributions form part of accumulated surplus. Changes to the endowment balances are as

follows:

2020$

2019$

Balance – Beginning of year 27,378 24,668Contributions received during the year 588 2,710


17 Commitments and contingencies

Total commitments under construction contacts for capital projects as at March 31, 2020 was $74,795, which is

fully funded by the Province.

There are lawsuits pending arising in the ordinary course of business, in which the Institute is involved. It is

considered that the potential claims against the Institute resulting from such litigation would not materially

affect the consolidated financial statements of the Institute. Any difference between the liability accrued by the

Institute related to the lawsuits and the amounts ultimately settled will be recorded in the period in which the

claim is resolved.

18 Supplemental cash flow information

2020$

2019$

Change in non-cash working capital itemsAccounts receivable (157) 922Inventories (8) 89Prepaid expenses (135) 93Due from government and other government organizations 900 (5,927)Funds owed by external agencies (1,555) -Accounts payable and accrued liabilities 4,243 6,738Due to government and other government organizations 1,029 168Deferred tuition fees 561 8,462Deferred revenue – other (407) 140Deferred contributions 526 2,658

4,997 13,343

2020 $

2019 $

Non-cash transactionsReceipt of donated capital assets 359 382 Buildings and equipment under capital lease 2,724 4,820 Increase in asset retirement obligation and capital assets 2,097 1,222



(18)

19 Financial instruments

Fair value

The following classification system is used to describe the basis of the inputs used to measure the fair value of

investments:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 Market-based inputs other than quoted prices that are observable for the asset or liability either

directly or indirectly

Level 3 Inputs for the asset or liability that are not based on observable market data; assumptions are

based on the best internal and external information available and are most suitable and

appropriate based on the type of financial instrument being valued in order to establish what

the transaction price would have been on the measurement date in an arm’s length transaction

The classification of portfolio and endowment investments is disclosed in note 5.

Risk management

The Institute has exposure to the following risks from its use of financial instruments:

Credit risk

The Institute is exposed to the risk that the counterparty defaults or becomes insolvent. The Institute’s

investments in pooled funds that hold debt securities are exposed to such risk. Credit risk also arises from the

possibility that student, trade and other receivables may not be collected.

This risk is mitigated by proactive credit management and investment policies that include regular monitoring

of each debtor’s payment history and performance.

As at March 31, 2020, accounts receivable comprises:

Under 90 days

$Over 90 days

$Total

$

Student 3,241 123 3,364Trade and other 2,753 237 2,990Allowance for doubtful accounts (285) (90) (375)Funds owed by external 1,555 - 1,555

7,264 270 7,534



(19)

Market risk

There is a risk that fluctuations in market prices will affect the Institute’s net assets and the value of holdings in

investments. Market risk comprises the following:

Interest rate risk

Interest rate risk refers to the effect on the market value of the Institute’s assets due to the fluctuations in

interest rates. The market value of the Institute’s investments in fixed income pooled funds is also affected

by fluctuations in interest rates.

Foreign currency risk

Foreign currency exposure arises from the Institute’s foreign currency denominated investments.

Fluctuations in the relative value of foreign currencies against the Canadian dollar can result in a positive

or negative effect on the fair value of investments.

The Institute manages its credit risk and market risks on its investments by investing in funds that have a

well-diversified portfolio of securities.

Liquidity risk

Liquidity risk is the risk that the Institute will not be able to meet its financial obligations as they become due.

The Institute manages liquidity risk by continually monitoring actual and forecasted cash flows from operations

and anticipated investing and financing activities to ensure, as far as possible, that it will always have sufficient

liquidity to meet its liabilities when due.

Other than the Institute’s debt, which matures according to the timeline provided in note 13, the Institute’s

financial liabilities mature within 12 months from the consolidated statement of financial position date.



(20)

20 Expenses by object

2020$

2019$

Salaries and wages 194,350 181,956Employee benefits 41,092 37,289Amortization of tangible capital assets 25,834 27,224Supplies and general 22,869 18,095Fees for service 20,929 18,000Repairs and maintenance 19,806 17,835Utilities and taxes 6,137 6,155Student awards 4,691 4,357Training and travel 4,347 4,114Cost of sales 4,275 4,893Interest 3,763 3,727Printing and advertising 3,162 2,608Promotional and catering 2,551 2,239Contractual professional development 1,933 1,890Equipment and facilities leases 1,207 1,220Telecommunications 1,151 1,008Banking and insurance 601 465Official functions 63 74

358,761 333,149

21 Related party transactions

The Institute is related through common ownership to all Province of British Columbia ministries, agencies,

school districts, health authorities, colleges, universities and crown corporations. Transactions with these

entities, unless disclosed separately, are considered to be in the normal course of operations and are recorded at

the exchange amount.

The Institute administers funds on behalf of British Columbia Council of Admissions and Transfer (BCCAT)

and other external agencies. Included in accounts receivable is $1,555 (2019 – $6,363 included in accounts

payable).

22 COVID-19

In March 2020, the World Health Organization declared a global pandemic related to the coronavirus known as

COVID-19. The impacts to the economy are expected to be far-reaching. The Canadian public post-secondary

sector is expected to be impacted due to the economic environment and related uncertainty including physical

distancing measures and international travel bans, which may cause a potential decrease in revenues. The

potential impacts are being reviewed, but the nature and amount is still to be determined.

23 Comparative information

Certain comparative information has been reclassified to conform with the consolidated financial statement

presentation adopted for the current year.

British Columbia Institute of Technology CAR (March 2020)...British Columbia Institute of Technology...

Documents

Transcript of British Columbia Institute of Technology CAR (March 2020)...British Columbia Institute of Technology...